India Targets Saudi Investment in Building Strategic Oil Reserve

Raquel Nash |Tuesday, March 12, 2019

Pradhan red flags higher crude oil prices to Saudi Arabia

The outlook points to pressure on demand for crude from the Organization of the Petroleum Exporting Countries as the United States and other rivals expand supplies. Mr. Falih said the group was unlikely to change its output policy in April and if required would make adjustments in June.

The story that has been underpinning prices is the OPEC-led supply cuts that have been trimming about 1.2 million barrels per day since January 1. Last year, Riyadh agreed with OPEC and its partners, including Russian Federation, to cap production at 10.31 million barrels a day.

Saudi's participation in the Indian Strategic Petroleum Reserve program was discussed at a meeting between the kingdom's Energy Minister Khalid Al-Falih and his Indian counterpart Dharmendra Pradhan in New Delhi on Saturday, according to a government statement on Sunday.

The resolution was to be subject to a review to either extend the cut by June, or discontinue after the monitoring team has reviewed the impact.

With Venezuela output falling further due to US sanctions and power blackouts, oil refiners put in requests - or nominations in industry jargon - for Saudi crude of more than 7.6 million barrels a day for April, the person said.

OPEC's share of the cuts is 800,000 bpd, to be delivered by 11 members - all except Iran, Libya and Venezuela, which are exempt. "Aramco is finalizing their April allocations today or tomorrow so we will know more on Monday".

USA crude oil output will rise almost 2.8 million bpd, growing to 13.7 million bpd in 2024 from an average of just under 11 million bpd in 2018, the IEA said, making the United States by far the biggest oil producer in the world.

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"If you look at Venezuela alone you would panic, if you look at the U.S. you would say the world is awash with oil. We think 2019 demand is actually quite healthy".

A host of involuntary supply curbs in OPEC members caused by unrest in Libya, and USA sanctions on Iran and Venezuela, have also helped to boost prices.

On the other hand, production in USA hit a record of more than 12 million bpd in February.

Oil markets have been supported this year by ongoing supply cuts by the group called OPEC+, which has pledged to cut 1.2 million barrels per day (bpd) in crude supply since the start of the year to tighten markets and prop up prices.

Analysts see rising oil prices as good for Nigeria, Africa's largest oil producer that runs a mono-economy driven by oil proceeds.

Oil rose to around $67 a barrel on Tuesday, supported by Saudi Arabia's plan for further voluntary supply curbs in April and by a cut in oil exports from Venezuela due to a power outage.

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